Help! I Spend More Than I Make

No one ever intends to spend too much and there are a variety of reasons that it may happen to you. It could be that your income was reduced or one month that just plain spent too much. Maybe you had a car repair or medical bill and those monthly payments put you over the top. The reason doesn’t really matter; what does matter is what you do about it now.

Create a budget

The first thing to do is create a budget if you haven’t yet. Make a list of your on-going expenses and estimate the variable expenses as best you can. Then, figure out how much you’re running short each month by subtracting your total expenses from your net monthly income.

Prioritize expenses

Next, don’t panic…take action. Make sure you prioritize your expenses so that you have food on the table, a roof over your head, electricity/water/heat, transportation to work, etc. As far as debt payments go, make sure to pay secured debts first (like mortgage or car loans) and student loans. However, read below for another tip that may help.

Contact lenders/creditors

This is only a temporary solution, but some lenders will allow you to take a forbearance, where you don’t make a payment for a short period of time. Make sure you know all the terms and that they are affordable and realistic before agreeing to anything. For instance, if you need to pay 3 months’ worth of payments at the end of the forbearance, that may be tough to afford.

Spend less

Cut back on the non-necessities first such as clothes (that aren’t needs), dining out, coffee shop coffee, etc. Use coupons &/or shop sales and thrift stores for items that you do need and bring your coffee and lunches from home. Take a good look at what you spend and cut back wherever possible.

If you’re only a little short each month, that might be all it takes. If not, it will probably take a combination of the above suggestions and the following:

Increase income

Can you get overtime? Are you working PT and perhaps can increase hours? Are there side jobs that you could do, such as babysitting, mowing lawns, or shoveling snow? How else could you increase income?

Sell items

Use a free, safe website to sell items, whether big or small. Sell your treadmill, old video game system, and/or other items that you no longer use. Sometimes you can even sell clothes or shoes that you no longer wear or maybe never have. Or now that it’s nicer weather, have a garage or yard sale. You’d be surprised how much money you can make selling items that are collecting dust in your home.

Get financial counseling

If debt is overwhelming – i.e. high interest rates &/or high payments – and/or you’re not making any headway on your debts, it is a good idea to talk to a credit counselor with LSS and determine your debt repayment options. A Debt Management Plan is helpful for a lot of people in paying down debt faster and reducing payments &/or interest. This will save you quite a bit of money.

Use any cash windfalls wisely

If you get a bonus from work, another one-time/annual cash windfall or tax refund, use that to catch up &/or pay off a debt. Keeping current on bills is key, along with getting rid of a monthly payment. If you get caught up and have a little money left over, try to set some aside in a separate savings account. Savings can be your safety net in case of an emergency or unexpected expense.

Accidents happen, dryers stop working, and sometimes we spend too much money on things we don’t necessarily need. That’s just life and human nature.

The worst thing you can do is panic and ignore the situation. So take action: do what you can to minimize negative consequences and prevent a similar financial crisis from happening again.